New York attorney general probing antitrust allegations
Since February 2024, Capital One has been working to acquire Discoverin an all-stock transaction valued at $35.3 billion. The merger would create the largest U.S. credit card issuer, surpassing industry leaders like JPMorgan Chase and Citigroup.
But the deal is running into headwinds in Congress and the New York Attorney General's office.
In Congress, Elizabeth Warren (D-Mass.) Reps. Alexandria Ocasio-Cortez (D-N.Y.) wrote to the Office of the Comptroller of the Currency (OCC) and the Federal Reserve, complaining of what they calledCapital Ones history of consumer abuses.
[W]e write to bringyour attention to Capital Ones record of corporate misconduct, including a newly-revealed pattern of robo-signing affidavits in itsaggressive credit card debt lawsuits, they said.
Since 2000, Capital One has accumulated nearly $1 billion in fines for a range of illegal corporate behavior: ripping off consumers, discriminatory job postings, and egregious violations of anti-money laundering requirements, they wrote.
Capital Ones egregious failures allowed known criminals to use and abuse our nations financial system unchecked, fostering criminal activity and allowing it to continue and flourish at the expense of victims and other citizens, according Kenneth Blanco, director of the Financial Crimes Enforcement Network (FinCEN).
Antitrust issues in New York
New York Attorney General Letitia James is investigating whether Capital One'sproposed $35.3 billion takeover of Discover Financial Servicesviolates the state's antitrust law.
James asked a state judge in Manhattan in court filings on Wednesday to subpoena Capital One for documents needed for her probe, citing the bank's alleged lack of cooperation.
James said a merger could have a significant impact in New York because Capital One and Discover respectively have more than $9.5 billion and $6.5 billion of credit card loans there.
A "seedy" history
In their letter, the CongressmemberssaidCapital One has "a seedy history" of collecting debts through illegal harassment and has engaged in harmful practices such as robo-signing legal statements representing consumer debt amounts, spending less than two minutes reviewing each affidavit in lawsuits against credit card customers, according to an investigation by Capitol Forum, an investigative news organization.
The lawmakers wrote: Though the facts of each affidavit are legally required to be thoroughly reviewed and confirmed by the signer, former employees admitted that workers could get overwhelmed by the sheer volume and sign some affidavits with wrong debt amounts. If Capital Ones acquisition of Discover is approved, Capital One would inherit more than 300 million new customers, subjecting hundreds of millions of people to these abusive practices.
Capital Ones history of failures to meet its acquisition-related commitments, its consumerprotection and BSA/AML violations, and its aggressive debt collection and robo-signingpractices highlight a pattern of regulatory non-compliance and consumer harm, concluded the lawmakers.
As you consider Capital Ones application to acquire Discover and its 300 million cardholders, we ask that you thoroughly review the facts of these abuses.
The deal remains in doubt
Following the re-election of President Donald Trump in November 2024, both Capital One and Discover experienced significant stock price increases, reflecting investor optimism that the new administration might adopt a more lenient regulatory stance toward large mergers.
However, the merger's completion remains uncertain, contingent on approvals from federal and state regulators, as well as the resolution of ongoing legal challenges and objections from Congressional critics and consumer protection agencies.
The letter is also signed by Katie Porter (D-Calif.), Ral Grijalva (D-Ariz.), James McGovern (D-Mass.), Cori Bush (D-Mo.), Greg Casar (D-Texas), Summer Lee (D-Pa.), Sylvia Garcia (D-Texas), Rashida Tlaib (D-Mich.), Jesus G. Chuy Garcia (D-Ill.), and Al Green (D-Texas).
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-11-22 17:06:46
